How Do I Get a Contract with a Bank to Clean Out Their Foreclosures for Them?

by Cindy Quarters, Demand Media

A foreclosed home is often filled with all kinds of junk.

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When a bank forecloses on a house, the bank takes physical possession of the house and must resell it in order to recover some or all of the bank’s investment. Before the property can be sold, all of the previous owner’s belongings must be removed. Banks do not handle this themselves, but instead hire small companies to perform this service for them. In order to get a contract providing clean out services for a bank, you need to understand who hires the contractors and what they expect.

REO

REO stands for “real estate owned” and is the section of the bank’s operations responsible for dealing with homes that have been repossessed and are being held by the bank. These properties represent a significant loss of income to the bank, and they normally want to sell them as quickly as possible. New properties in the REO department are those most likely to need cleaning out, and contractors who can provide quick action and fast turnaround on new holdings will get the bank’s repeat business.

Clean Out Basics

When you start a clean out business, you need to have a good understanding of what you will be expected to do. Bank REO officers will be certain to ask you what your services cover. In most cases, when banks are seeking someone to handle cleaning out a foreclosure, they want someone who will completely clean out the inside of the home, including closets, cabinets and drawers. Everything has to go, whether it is trash, abandoned furniture or something in between. When you talk to bank personnel, be clear that you provide complete clean-out services, and be prepared to provide a time frame as well.

Business Requirements

A bank won’t work with you unless they are sure that you comply with all laws and that you have adequate insurance. The U.S. Small Business Association has detailed permit information for each state, or check with the county or city office that issues business permits in your area for more information. The bank’s REO officer will also need proof of liability insurance that will protect the bank in case you damage the home, and the bank may also require you to have workers' compensation coverage if you have people working for you. The amount of insurance required varies by area, so check with a knowledgeable business insurance agent in your state to make sure you have enough coverage. A bare minimum amount of coverage is $250,000, but the bank may require you to have more.

Approaching Banks

Once you have everything in place, contact the REO officer at banks in your area. Make an appointment to talk to her personally, so that you can get to know her. Find out what the bank’s needs are and discuss how you can help to fulfill these needs. Be prepared to show them what you can do that the others cannot do, whether it is to provide the same service at a lower price or offering additional services, such as carpet cleaning, at the same price point. Provide the REO officer with your business card and with flyers showing work you have done in the past, as well as any references. Some banks will have you sign up with them online, where you can list the specific services you offer as well as the various zip codes where you are willing to work. This can work well if there is not much competition, but a personal visit to the bank will help to set you apart from the others. Continue to contact the bank REO officer on a regular basis, about once a month, until you are offered a contract or given a flat refusal.

About the Author

A recipient of a business and technology degree from the master's program at West Coast University, Cindy Quarters has been writing professionally since 1984. Past experience as a veterinary technician and plenty of time gardening round out her interests. Quarters has had work featured in Radiance Magazine and the AKC Gazette.

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